New EU legislation will cut red tape by reducing administrative demands on applicants for European funding and speeding up payments. At the same time the new rules, which come into force on 1 January 2013, will protect taxpayers by increasing transparency and accountability.

It includes wider possibilities to use lump sums and flat rates for smaller amounts, eliminates the need to fill in the same details every time you apply for EU funds and introduces online applications as well as many other new features.

The Financial Regulation was formally adopted on October 25th and entered into force as of October 27th 2012. The Commission has now adopted its new detailed rules of application.

Simplification

The period between calls for proposals and the conclusion of grant agreements and payment deadlines will be shortened. The grant system's focus will be shifted from reimbursing cost claims to payments for the delivery of results through a greater use of lump sums, flat rates, unit costs. There will also be a greater use of prizes, paid to the winner of a contest for developing the solution to a pre-defined problem.

Beneficiaries of EU funds will no longer have to open separate interest bearing bank accounts. Furthermore, even if interest is generated, it will not have to be returned to the EU Budget and neither will it be counted as revenue of the project. This addresses a major concern of grant beneficiaries and other stakeholders, in particular from the research and the NGO community, that was brought up during the public consultation of 2009 preceding the Commission's proposal of 2010.

More accountability and protection for European citizens

The new rules will increase the accountability of those managing EU taxpayers' money. In the future, Member State authorities managing EU funds will have to sign and submit to the Commission annual declarations certifying that EU funds have been used correctly.

Mechanisms for financial corrections in cases of irregularities committed by beneficiaries and discovered through audit have been strengthened: as a deterrent, the Commission will publish decisions imposing sanctions for misuse of EU funds. The majority of errors related to EU expenditure currently happen at national level.

Enhancing the effectiveness of EU funds through innovative funding mechanisms

In the future, various financial instruments, such as loans, equity or guarantees will be used to enhance the effectiveness of EU funds and thus multiply their financial impact. New possibilities are created for a more flexible implementation of public-private partnerships ('PPPs') which reflects the calls of European industry stakeholders who are the partners in such PPPs.

In the area of external action, the EU will be able to create EU trust funds pooling its own resources with those of its Member States and other donors in order to better coordinate and deliver external aid and increase its visibility.